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The tier called for a virtual reality (VR) showroom to replace physical inventory, which would have kept new investments at a minimum for small dealers. However, the same dealers saw it as a way to squeeze them out of the business. Instead, many dealers have opted to place themselves in higher tiers and make the necessary investments to potentially reap larger rewards.

Cadillac sales dropped 28.6 percent in the United States last December and fell 8 percent year-over-year.

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30 Comments

I wonder if healthy Tier 4-5 dealerships could open Tier 1 stores in traditional retail mixed-use or mall to expand the presence and relevance of the brand in larger markets?

Think Mini Cadillac House meets Apple/Tesla Store to display brand and technology with the help of local dealership inventory and Tier 5 service. Great way to change perception and coach consumer on Autonomous, Electric and Book. Perception changer.

The article is interesting on several levels. First is that Project Pinnacle is a failure for Cadillac, like it or not.
If the factory makes it difficult for dealers to profit, then they move to selling things that do.
As I have said for a long time, if the Sales people can make money, it is of benefit to the customers to own it.
If the dealers or Salespeople do not make money, they go elsewhere, and it is no longer a benefit to make money.
Cadillac’s advertising is Way off the mark, if there is any advertising.
In its “Hay Day” the advertising would portray, a young couple, playing golf, driving a Large sedan to the course or on the road. People wanted to be those couples. Something to strive for.
Now GM thinks people want “Race Cars” that no one except 18 year olds can get into or out of, but not afford.
The Advertising Rarely if ever shows the cars. They show inner cities. OK Who approved that?
Or the Advertising focuses on Price, and monthly payment ignoring the product.
Advertising needs to promote the product, and what it can do for the owner.
The Time Share industry did not make Billions of Dollars selling Room Rates, they sold “Fun Vacations”.
They do not need to show people that are obviously models and could not afford the car unless they won the lottery yesterday. Sure show young college graduates etc.
There are so many ideas that can be done that would make great ads.
Show country roads, show Golf courses, show young families, even if a majority of the owners are 60+ years old, in their minds they are still 20.
I understand the world is changing. Yet you cannot forget the existing customer base as you move into the future.
Just an example of an ad I would like to see although I submitted it to the factory, it was ignored.
Picture an Airport Car rental counter, the young couple come up with the hundreds of other travelers behind, and ask for their Cadillac.
The rental person, says, Sir, your Lincoln is ready.
The wife goes Ballistic, and says NO, We reserved a Cadillac We expect a Cadillac, A Lincoln is not a Cadillac.
The rental person says, Mam could you step aside and let the next person, approach.
No, she says, We reserved a Cadillac, I expect to leave here in a Cadillac….

Next scene, the couple loads their luggage and kids in the Cadillac sedan….and drive off.
You have to create the desire.
That is Advertising 101.

I agree on some points, but spending money on golf ads would be a waste. GM has the old guys already buying the cars. My Dad is one. He remembers Cadillac as a sign of “you’ve made it”. Younger folks do not even come close to buying into that. They want the German brands that guarantee you “made it ” cred. They want blacked out packages. They want performance.

Caddy’s marketing has been horrific in my mind. And the dealers are not educated on the newer options. When I would service my Midnight ATS the guys would crowd around. ” Where did you get that done??” . They did not know or sell these things. Mine also had a wing at the back that looked awesome. No one in sales new about them. I have only seen one midnight package in Toronto. Yet the roads are filled with AMG etc.

Then there is the dealer experience. As great as my dealers are, they are sharing space with a SPARK, Malibu etc. Go to one of the uber cool BMW dealers here and see the difference in how you feel. How they MAKE you feel. Google BMW Toronto or Audi dealers here. The buildings alone make you feel freaking cool walking in.

But Steve, a Cadillac at a rental counter is no different from a Lincoln. You’d either have gotten a FWD Fusion-based MKS or a FWD Impala-based XTS. Both are merely tarted-up versions of their respective makers bread-and-butter sedans. Neither was really anything special.

Today if that scene repeated, one might get a Continental although I don’t think Ford puts them in rental fleets but if they did, I sure wouldn’t huff and puff for a Caddy as the Lincoln is far and away the better product in my opinion.

Well here is the problem that Cadillac just has too many dealers and holds little power to cull the heard.

The only real way to kill over half of these dealers is to buy them out. But that is not possible as it would be very expensive at a time they need the money for new and better products.

GM has tried many tactics on killing dealers and only can go so far before the government comes in or if it become cost prohibitive.

The thing that hurts at Cadillac the most is they want to raise the ATP and lower the volume or spread them out to where the Cadillac is not seen as a mass market or fleet sale car. This is not my thinking but what Cadillac management has stated.

It is hard to make someone feel special in your product if you see on just anywhere. Others have done this and failed like Porsche and others.

High end Luxury is a fine balance of price and volume. The only area where you can get away with more volume is SUV models. Cars tend to require more limited numbers to make them desirable.

With China sales GM can play the limited numbers here in America much easier than if they were only a single market car.

GM just needs to keep working to kill dealers as they go and in time they will arrive at the proper number of dealers needed.

Not too many dealers, it is that they let too many GM dealers include Cadillac, so they end up treating them like another Buick or Chevy that they stumble into.
They are not selling them they are just delivering expensive Chevy’s without any regard to what they are doing.
Stand Alone Cadillac Stores like ours are rare. We fight the “Big Box” guys all the time. No one wins.
GM as usual is working overtime to kill off their market and their customers.
What they forget, is it is Sales that makes a company prosperous and great.
I worked for a manufacturer years ago that had been around since 1925, they outsold their competitors 3 to 1. Then they and made 3 times the profit.
New management decided that if they switched to distributors they would sell more. And make more money.
So they cut their prices in half.
Went to distribution.
I left the company.
Guess what?
They are out of business today.
The competitors are still there.

You have too many in one market and it dilutes the profits and service suffers as they can not afford to keep the best people or have enough qualified staff.

On the other hand I just bought a GMC from a Cadillac GMC dealer and got Cadillac treatment as it should be done. The benefit can go either way and if done properly it could benefit the other brands.

The key to killing many of the small unprofitable dealers has been the larger dealer networks buying them out and closing them. It helps GM and it helps them in the markets where they can not support 3 Cadillac dealers in a small area.

GM tried to sell the volume big market luxury cars and ended up selling them to rental fleets to keep the from rotting on the lots. Not the thing you want to do if you want to improve an image or retain resale and create demand.

Volume and exclusive are not terms that work together with anything especially with cars.

Even though Cadillacs are good looking vehicles to me, they are not catching peoples eyes on the roads and in the ads. The cars somehow don’t measure up to the older Cadillacs in appearance. I think they blend in to the traffic but in a boring sort of way. There isn’t enough distinction between the different models. They all look like the same car but slightly different sizes. When I see a Cadillac I haven’t the foggiest idea what model it is and that is partly because there isn’t any personality differences and distinctive model names. I don’t know what a CT6 or an ATS is but I can damn sure tell you what an Eldorado is, or what a Sedan De Ville is or what a Coupe Deville is. The letter/number name tags don’t mean anything to the public. it takes time to learn those. I know that a Z28 is a model of Camaro, and LS means luxury sport and LT means luxury touring and LTZ means top of the line. It takes years to learn that and most of the public doesn’t know those meanings. Get some new model names that people can remember or relate to.

For what its worth I can assure you that going back as many decades as you wish you’ll find that consistently 20% of Cadillac Dealers (large) have sold 80% or more of the vehicles. Much of the domestic industry’s franchise network stems from a period when vehicles were much more service intensive than nowadays and business was done on Main Street USA. Not one single import badged brand was even doing business in this country when domestic brand dealer networks were established and when the invaders showed up they never bothered to move into small-town America.
State laws make it virtually impossible for manufacturers to cancel franchises without good reason (criminal behavior, and such). It isn’t hard to get the impression from some of the remarks here that the commenters don’t even know that dealerships are independently owned businesses, don’t belong to the manufacturers, and that in the United States federal and state laws require parties to a contract to uphold their part of the agreement. Dealer franchises are contracts that can’t be arbitrarily cancelled.
And if a customer lives in smalltownsomewhere and buys a Cadillac he’ll/she’ll have a better chance of getting it properly serviced than perhaps otherwise. So what exactly is the problem here?

For some of these Cadillac dealers to survive they have had to sell other brands as well . If some of those dealerships were stand alone businesses they wouldn’t survive .
Which is the conundrum for Cadillac , if they rid themselves of some of their smaller dealerships which are in smaller cities customers are not going to drive extra miles for a Cadillac , that’s a sad fact .
The Cadillac dealership in my area used to be the only one around for the city but now the dealership has been bought by a company with several dealerships around the state , so now Cadillacs are sold right next to Hyundai’s and their luxury car Genesis . XT5’s are parked right next to Tuscon’s and XTs and CT6’s next to G90’s and 80’s .
And right down the road we have a Chevy dealership that ONLY sells Chevy’s .
For a franchise to sell Cadillac’s next to Hyundai’s takes away from the image that Cadillac needs so badly .
I always get good treatment and the facility is nice and clean but when I am buying GM’s best vehicle I want to be sure that the sales people and technicians treat my car better than something else they may sell . Thank goodness my salesman still works there so I do get treated right but something like this shouldn’t be allowed on the sales side of the company .
And Cadillac can get rid of VR , that is buying something that you haven’t test drove etc….
People can go shopping for a car and see two of the same parked next to each other , but they will pick the one that speakes to them . I know I’ve done it .
Lot’s of work needs to be done at Cadillac .

I think dealerships are a scam in general. We’re deep into the age where cars should be sold in ‘stores’. Scion had the right idea but simply setting a price. Their only mistake was not to offer the occasional ‘sales’ on those prices.

Cadillac could have stores in upscale malls. Just like Tesla. Want a test drive? A Cadillac will come pick you up.

Cadillac can not go to stores as they are trapped in the franchises system forced on automakers years ago.

Some have tried to do the store deal but they end up in court.

If GM could erase all the dealers tomorrow they would and they would sell direct. But to do so they would have to buy out all the dealers and that is cost prohibitive.

Even today they have to use the customer servers as leverage to with hold discounts and holdback to the dealers to get them to do what GM wants. Even then most ignore GM and do not adhere to the dealer plan set fourth by GM.

The only way out for automakers is if the Goverment lets them negate the dealer agreements with no penalty. But that would never happen.

So they do not want new comers to the auto market to go with direct sales. It is not Tesla that worries the automakers but China automakers coming here selling direct at rock bottom prices.

As long as they are stuck with dealers they will prevent others from getting a leg up.

Pandora’s box was opened years ago and is damn near impossible to close today.

Disagree, it is not just automotive dealerships. Companies like Amazon and Walmart have destroyed local retailers in favor of big box stores. The factories still have to deal with returns. However what that kind of thing has done is reduce the quality of the goods sold.
Tesla would close tomorrow without government subsidies. So do not tout how wonderful they are.
European and other countries receive protection and breaks from their countries to make them competitive here. Yet the Media types cry anytime we try to protect in any way business here.
Cadillac cut back on the margin dealers had to work with saying “It was to keep the brand Competitive.” A lie.
Chevy, Buick, BMW, Mercedes, and Audi etc, have more room to discount and work with customers. Not Cadillac,
Wonder why the cars are not selling?
Point the fingers at GM Corporate.
Having observed business for many years, When Accounting types run companies, regardless of who they are, they go out of business.
When Engineering types run companies, they all are profitable.
Why is that? It is the mindset they use.
Accounting wants to know how can we cut costs, reduce what we give the customers raise prices and make more money.
Engineering types think, How can we make this better, last longer, and be more user friendly.
It is not just the auto industry.
As I have said before, when you let the Score Keepers run the train, the train derails.
But it wasn’t their fault, they made money for the investors by not fixing the rails. So it was the steel company that made the rails that was at fault.

Tesla would not close tomorrow without government subsidies. Remember they still have that stocks scam going on. If they need some more money they just sell some more stock. Is Elon musk the reincarnation of PT Barnum?

Just as Cadillac did with GM Performance and HPVO, to develop and build the V-series cars, they need to completely overhaul their dealerships and advertising. All Caddy dealers should be like the Caddy house in Manhattan and there should be less of them. Cadillac’s are exclusive cars, no need to sell them alongside Chevys, GMC and made for China Buicks. Instead of showing snowflakes-who would never buy a Caddy in the first place-cruising through lower Manhattan-another not gonna happen, show the CTS-V-3 smoking an AMG Benz or BMW M5, or negotiating the Nurburgring or carving a mountain road on the way to the steakhouse, that’s Cadillac. Everyday we hear how incredible the energizer bunny Teslas are, but we hear nothing about Cadillac, who has stormed back with world class products. The cars are where they need to be, now adjust the dealers and the advertising and sales will increase.

Not really interested in Cadillac for the ability to beat a Benz or BMW, even less interested in Nurburgring. A Cadillac is supposed to carry one in glorious luxury to the all you can eat buffet, not the steakhouse.

Maybe its just me, but I think the biggest problem with Cadillac is that as someone who would like to consider them for my next car, I just plain don’t care for their styling. The XT5 (for example) is just not appealing. For the money (or less) there are just better-looking cars out there.

I really want to like Cadillac vehicle but they either don’t have the type of vehicle I want or the styling to draw me in.

Where i live we dont have stand alone Cadillac dealerships. It isn’t practical. I could care less if a Malibu is beside a CTS. My experience is that the majority of Cadillac buyers are like me, long time GM faithful that want to move up.

Thank Project Pinnacle. That idea has destroyed dealers all over.
The GM thinks of Volume and ignores the facts.
Take Wyoming for example, 50th in population, No Cadillac dealers, want one you have to drive 8 hours to get one.
GM was built on the concept of moving up.
These clowns want Cadillac to be an expensive Chevy, or under the last administration an Audi, or BMW.
They ignore Culture.
They do not know their market.